Thank you for your inquiry. We will respond to you as soon as possible.

e-newsletter

Thank you for your interest in our e-newsletter. Our records indicate that you are already receiving our e-newsletter. If you would like to make changes to your frequency settings, please click on the "My Account" link on the left navigation.

e-newsletter Preferences

Your e-newsletter settings have been saved.

Some of the content on this website requires JavaScript to be enabled in your web browser to function as intended.
This includes, but is not limited to: Flash (also requires the Adobe Flash Player), navigation, video, image galleries, etc. While
the website is still usable without JavaScript, it should be enabled to enjoy the full interactive experience.

Monday March 19, 2018

Washington News

IRS Highlights Education Benefits

With America's children back in school this fall, the Service highlighted education benefits for teachers and students in IR-2017-163 and 166.

Teachers have three potential benefits. An educator may deduct "above the line" amounts up to $250 so long as they are unreimbursed business expenses. This deduction is available for kindergarten, elementary or secondary school staff who teach at least 900 hours per year.

A second benefit for teachers who itemize deductions is to claim "out-of-pocket items such as class supplies, training and travel." This is a miscellaneous deduction.

The third option is for teachers who are continuing their education. They may qualify for the Lifetime Learning Credit or American Opportunity Tax Credit.

Students may also benefit from the Lifetime Learning Credit or American Opportunity Tax Credit. In addition, they may have a Qualified Student Loan used to pay higher education expenses for themselves or a spouse. If so, they may qualify for a special deduction for paying interest on a student loan. To qualify, their modified adjusted gross income (MAGI) in 2017 must be under $80,000 for a single taxpayer or $165,000 for a joint return.

Work-related education may also qualify for an itemized deduction. Applicable education that is used to improve work skills may be deductible for both employees and the self-employed. Self-employed persons may reduce their self-employment tax and their income tax.

Another excellent benefit for funding education is a Sec. 529 plan. Section 529 plans are administered by each state. They permit contributions of cash up to five annual exclusions ($70,000 total transfer in 2017). The contributions of cash will be invested and grow tax free. You can withdraw tax free any payments of tuition, fees and other qualified expenses. The expenses must be at a postsecondary institution.

Editor's Note: Additional information for teachers and students is available on www.irs.gov. Another helpful website to learn about Sec. 529 plans is www.savingforcollege.com.